Emerging lithium producer Core Exploration (ASX: CXO) has released its Pre-Feasibility Study for the Grants Lithium Deposit, a key component of the Finniss Lithium Project near Darwin. The PFS clearly demonstrates the Finniss Project economics to be compelling, with globally competitive cash costs that result in high operating margins and rapid capital payback. The project is expected to deliver $168 million in free cash generation over a period of only 26 months.
HIGHLIGHTS
- Initial development of Grants lithium deposit generates NPV10 of A$140 million (pre-tax) with an IRR (pre-tax) of 142% at average LOM concentrate price of US$649/t (FOB) over LOM;
- NPV10 increases to A$246 million (pre-tax) and IRR (pre-tax) increases to 202% using US$895/t (FOB) concentrate price (current spot price);
- Project generates A$346 million in revenue and over A$168 million in free cashflow (pre-tax), driving rapid payback period of less than 12 months;
- Initial operational mine life of 26 months, producing a high-quality spodumene concentrate of 5.0% Li2O;
- 1Mtpa DMS processing plant, producing 225,000tpa[1] concentrate grading 5.0% Li2Oat nameplate capacity;
- Low capital cost of A$53.5 million (including contingencies of 15%);
- Operating costs of less than US$279/t concentrate (A$372/t), including royalties, generates a robust operating margin of more than US$370/t on low case pricing assumptions;
- Simple DMS plant design will allow for rapid construction timetable;
- Approximately 50% of the total development capital cost expected to be met withUS$20 million pre-payment commitment by Core’s largest shareholder and major Chinese lithium producerYahua Group;
- Financing discussions advanced with strategic financiers, including global offtake companies;
- Significant potential to enhance Finniss Project mine life and economics through the later integration of the nearby BP33 deposit, and discovery of additional deposits at Finniss; and
- CXO Board approves commencement of Feasibility Study, with target completion date of late 2018, and ultimate objective to propel Core into the ranks of ASX lithium producers in 2019.
Emerging Northern Territory lithium producer, Core Exploration Ltd (ASX: CXO) (Core or the Company) is pleased to announce the release of its Pre-Feasibility Study (PFS) for the Grants Lithium Deposit, a key component of the Company’s wholly-owned Finniss Lithium Project, located near Darwin in the Northern Territory.
Executive Summary
Core has taken a major step forward in its goal to become a major Australian lithium producer through the delivery of this PFS, which seeks to unlock a new lithium province near Darwin in the Northern Territory.
Core’s development of the Finniss Lithium Project is initially centred on production from the high-grade Grants deposit as an open pit mining operation, and construction of a simple 1Mtpa Dense Media Separation (DMS) process plant that will produce a high quality 5% spodumene concentrate for export.
The high grade of Grants, when coupled with proximity to infrastructure, low capital and operating costs, results in a development capable of delivering A$168 million (pre-tax) in free cash generation over a period of only 26 months. This strong cash surplus will ensure Core is well placed with a first-mover advantage in this exciting new lithium province and lays solid foundations for the building of a long-term lithium production hub.
Existing road infrastructure will provide access for daily road train movements of concentrate product to the Darwin Port for shipment which is located 88km from the Project area. The Project also has other substantial infrastructure advantages, including being close to grid-power, gas and rail infrastructure and being less than a 1-hour drive from the skills, trades, workshops and services in suburban Darwin.
[1] . There is a low level of geological confidence associated with the inferred mineral resources and there is no certainty that further exploration work will result in the determination of indicated mineral resources or that the production target itself will be realised.
